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How to Identify ESG Risks and Activities

Toby Graham /

With increasing pressure from stakeholders and investors to understand, manage and report on Environmental, Social, and Governance (ESG) risks, it is increasingly important for organizations to be able to identify these risks quickly and accurately. Identifying ESG risks can be a complex process that involves asking the right questions, prioritizing key issues/impacts, and utilizing data automation technology. By understanding how to properly identify ESG risks, organizations can ensure they are making informed decisions based on accurate information.

As you start developing objectives and establishing measurement strategies, the risks and opportunities become more apparent across your business. Which areas are you lacking data? Which parts of the organization will be more challenging to get buy-in? On the flip side, where are your quick wins? Identifying your risks and opportunities helps prioritize your initiatives to ensure you’re focusing on the most impactful ones first.

Start by Asking These Questions

Developing and reporting on ESG is a demonstration of strong corporate leadership and governance. But how do you get one off the ground?

We’ve listed out 5 steps to developing your ESG strategy, and we’re be going through each of these in more detail to get you started.

With increasing pressure from stakeholders and investors to understand, manage and report on Environmental, Social, and Governance (ESG) risks, it is increasingly important for organizations to be able to identify these risks quickly and accurately. Identifying ESG risks can be a complex process that involves asking the right questions, prioritizing key issues/impacts, and utilizing data automation technology. By understanding how to properly identify ESG risks, organizations can ensure they are making informed decisions based on accurate information.

As you start developing objectives and establishing measurement strategies, the risks and opportunities become more apparent across your business. Which areas are you lacking data? Which parts of the organization will be more challenging to get buy-in? On the flip side, where are your quick wins? Identifying your risks and opportunities helps prioritize your initiatives to ensure you’re focusing on the most impactful ones first.

Start by Asking These Questions

Which areas do you need more data in?

Identifying ESG risks and activities starts with asking the right questions, such as, “Which areas are you lacking data in?” Knowing what information is missing is essential to assess and manage ESG risks properly. Without knowing which areas need more data, it can be difficult to identify critical issues or impacts that could arise from not having adequate information. Companies should take a proactive approach by assessing their current level of data collection and determining what additional data may be needed for accurate risk management. By understanding where gaps exist, companies can prioritize gathering relevant information and create plans for collecting the necessary data.

Which parts of the organization will be more challenging to get buy-in?

Getting buy-in from different parts of an organization can be a challenge when it comes to implementing ESG initiatives. You’ll need to understand the key stakeholders and their motivations to ensure the successful adoption of any new ESG activities. Different departments and teams may have differing opinions on the need for, or urgency behind, certain ESG activities. For example, some teams may view sustainability as a “nice to have” while others may see it as essential for long-term success. By understanding individual team dynamics, you can identify which areas are more likely to require additional effort in gaining acceptance and support for ESG initiatives.

Where are your quick wins?

Asking, “where are your quick wins?” is an important question to consider when identifying ESG risks and activities. Your quick wins are the low-effort, high-impact initiatives that can be implemented quickly and efficiently to reduce or mitigate the risk of ESG.

By focusing on these areas first, yous can better understand the potential risks you face while taking actionable steps toward mitigating those risks. Assess your current practices and identify any gaps or opportunities for improvement which could lead to short-term solutions that have a long-lasting impact.

Look for ways to take advantage of existing resources such as technology tools or external networks to maximize your return on investment from quick-win initiatives. This helps ensure your organization’s prepared for future ESG challenges while also benefiting from immediate improvements in risk management practices.

Next, prioritize areas of focus based on ESG risks and activities identified.

Once you’ve identified potential ESG risks and activities, start prioritizing your focus areas. You can do this by assessing the severity of each risk and determining which requires the most immediate attention. Look for opportunities to take advantage of existing resources, such as technology tools or external networks, to reduce the risk of ESG impacts.

Utilize data automation technology for collecting and validating portfolio data

Data automation technology can help organizations drastically reduce the time and effort required to collect and validate their portfolio data. Using technology, companies have access to more accurate information, allowing them to quickly and accurately identify ESG risks.

Automating the data collection also saves time by eliminating manual entry errors while also providing an efficient way for companies to review their results in real time.

Implement strategies to reduce risk, improve performance, and increase efficiency.

Once organizations have identified and prioritized ESG risks and activities, they can develop strategies to reduce risk, improve performance, and increase efficiency. This can involve implementing processes and looking for ways to streamline their operations.

Identifying your risks and opportunities helps prioritize your initiatives to ensure you’re focusing on the most impactful ones first.

Identifying and prioritizing ESG risks and activities is a key step in developing effective strategies to reduce risk, improve performance, and increase efficiency. By understanding the potential risks an organization faces, they can better identify which initiatives will have the most impactful results. This helps organizations focus their efforts on areas that are likely to yield the greatest benefit while avoiding those that may be less productive or cost-prohibitive. Additionally, identifying opportunities for improvement allows organizations to take advantage of existing resources such as technology tools or external networks to maximize their return on investment from quick-win initiatives. Ultimately, this helps ensure companies are focused on addressing the most important ESG challenges first while also benefiting from immediate improvements in risk management practices.

How KPA Helps Support Your ESG Goals

KPA’s here to help by providing consulting, software, and training to align with your ESG mission.

Environmental

KPA provides consulting and training to help ensure you’re minimizing your impact on your local environment. This can span ensuring compliance with environmental regulations, to helping develop strategies and best practices for reducing your environmental waste streams.

Social

KPA’s 35 years of health and safety experience are here to help you develop an initiative that shows you put people first. Rely on safety program data, comprehensive training library, and usage metrics to demonstrate your organization values people both inside and outside the company.

Governance

Lean on KPA’s comprehensive policy and training libraries along with in-depth reporting to demonstrate your organization follows good governance practices. This is governance that spans ethical sales practices, adherence to a comprehensive code of conduct, and audit trails that demonstrate your commitment to good governance.

KPA’s technology and expertise can help you make successful strides toward fulfilling your ESG mission.

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